Shocking news: People love free stuff, especially free apps. According to recent research from Connecticut-based technology research firm Gartner, 89 percent of the 45.6 billion apps downloaded this year will be free. Out of that 45.6 billion, only 5 billion will be paid apps.
Gartner’s study also reveals that when people buy, they buy cheap. Sandy Shen, a research director at Gartner, stated that 90 percent of paid-for downloads cost less than $3 USD. “Similar to free apps, lower-priced apps will drive the majority of downloads,’ she said. ‘Apps between 99 cents and $2.99 will account for 87.5 percent of paid-for downloads in 2012, and 96 percent by 2016.”
The vast majority of apps downloaded this year will come from the App Store, though alternatives like Amazon’s App Store and the Facebook App Center are beginning to garner more users.
The App Store already offers tons of free games
Gartner estimates that by 2016, 93 percent of downloaded apps will be free. So how can a developer hope to make any money? Garnter reports that in-app purchases may be the key, but emphasizes that app performance is the most important thing. “In-app purchasing opens the door to a recurring revenue stream for developers, but app performance and design will always be the most important factor when attracting new users and keeping them satisfied.”
Gartner expects that in-app purchases will make up 41% of App Store revenue. Currently, about 5 percent of apps on the App Store offer in-app purchases; that number may jump to 30 percent within the next four years.